LIFE PRACTICE COUNCIL UPDATES
Task Force Update to NAIC
The Longevity Risk Task Force provided an update on the task force’s activities on the NAIC Longevity Risk (A/E) Subgroup Dec. 11 call.
Academy Update to LATF
Donna Claire, chairperson of the PBR Governance Work Group, presented an update to LATF at the NAIC Fall 2017 National Meeting on the PBR resources developed by the Academy to assist actuaries and regulators in the implementation and review of PBR.
Council Comments on NAIC Statutory Framework Process
The Life Practice Council sent a comment letter to the NAIC's Financial Condition (E) Committee in December raising concerns over the process by which the NAIC is developing changes to the statutory framework for variable annuities (VAs), including both C-3 Phase II for risk-based capital (RBC) and Actuarial Guideline (AG) 43 reserve requirements.
Work Group Comments on Reinsurance Risk Transfer
The Life Reinsurance Work Group submitted a comment letter to the NAIC's Statutory Accounting Principles (E) Working Group in October on exposure draft 2017-28 relating to “Reinsurance Risk Transfer.”
Work Group Comments on APF
The PBR Governance Work Group’s VM-31 Review Subgroup sent comments to LATF in September on an exposed VM-31 Amendment Proposal Form (APF).
Fourth PBR Bootcamp
The Academy hosted its fourth PBR Boot Camp in Las Vegas in September, a three-day seminar that featured 18 dynamic, interactive sessions. The audience of about 60 was primarily regulatory actuaries, who received targeted instruction and also participated in intensive, focused discussion groups, providing an opportunity for attendees to share insights and learn from others’ experience following implementation of PBR in January.
Comment Letter on Financial Condition Examiners Handbook
The Academy's PBR Review Procedures Work Group submitted a comment letter to the NAIC's Financial Examiners Handbook (E) Technical Group in August regarding the exposure of proposed changes to the handbook.
Presentation to LATF
Mary Bahna-Nolan, chairperson of the Academy's Life Experience Committee and the Society of Actuaries’ Preferred Mortality Project Oversight Group, presented on PBR valuation considerations and recommendations related to accelerated underwriting to the LATF at the NAIC Summer 2017 National Meeting.
A bill that was passed by the New York Senate in June and is currently pending in the Assembly would enable life insurers to employ the Valuation Manual (VM) for PBR. Similar legislation is pending in Massachusetts.
To date, 47 states representing more than 87 percent of U.S. direct written premiums have adopted a new Standard Valuation Law (SVL) to enact PBR. This exceeds the threshold of 42 states and territories with 75 percent of written premium set by the NAIC for implementation of the VM, and life insurers in most states were able to start utilizing PBR on Jan. 1, 2017.
States Not Yet Adopting New SVL (percent of direct written premium as of June 20, 2017)
*Percentage of U.S. life underwriting
NAIC MEETING ACTIVITY
At the NAIC summer and fall national meetings, LATF adopted:
- VM-20 default cost tables updated using data through December 2016.
- Amendment 2017-6 to revise the Valuation Manual (VM) to point to VM-22 for the minimum requirements for fixed annuity contract valuation interest rates.
- Amendment 2017-42 to provide a guidance note to clarify what is intended by “expected claims” in VM-20 Section 9.C.2.d.
- APF 2017-57, which proposes to improve the VM-20 language defining the permitted values of starting assets.
- Exposures (from the Fall 2017 National Meeting):
- Re-exposed amendment proposal form (APF) 2017-70, which proposes to clarify the treatment of riders for the model reserve and the treatment of term riders when valued separately from the base policy, with a comment deadline of Jan. 15, 2018.
- APF 2017-47, which proposes to clarify the definitions of “deterministic reserve” and “stochastic reserve,” with a comment deadline of Jan. 15, 2018.
- APF 2017-78, which replaces the references to “states” with references to “jurisdictions,” for a 45-day public comment period ending Jan. 15, 2018.
- APF 2017-73, which proposes to clarify a requirement for the grouping of assets, with a comment deadline of Jan. 15, 2018.
- APF 2017-76, which proposes to clarify various references in VM-51, Experience Reporting Formats, with a comment deadline of Jan. 15, 2018.
- APF 2017-85, which proposes to add a guidance note to Section 3.D.11.c of VM-31, PBR Actuarial Report Requirements for Business Subject to a Principle-Based Reserve Valuation, with a comment deadline of Jan. 15, 2018.
- APF 2017-77, which proposes to smooth the grading from company experience to an industry table, with a comment deadline of Jan. 30, 2018.
The NAIC’s Variable Annuities Issues (E) Working Group exposed a new framework for reserve and capital requirements for variable annuities (Actuarial Guideline 43 and C-3 Phase 2 Instructions) with a comment deadline of March 2, 2018.
The Academy will host a webinar on Jan. 10 to provide an overview of key life issues discussed at the NAIC Fall 2017 National Meeting.